Scripps shares up amid Discovery talk

Shares in international factual channels operator Scripps Networks Interactive have spiked on the back of a report that Discovery Communications is eyeing a takeover bid for the company.

The prospect of a buyout was discussed at Discovery’s board meeting earlier this week, according to Variety, citing a source with knowledge of the situation.

The story sent Scripps’ shares soaring after trading had concluded on Tuesday – up US$10.90 (14.5%) to US$86.15.

Scripps operates channels in the US and internationally including Food Network, HGTV and Travel Channel. The company is also a 50% stakeholder, along with the BBC, in the UKTV channels business after a deal worth £340m (US$553.5m) was concluded in August 2011.

The group was controlled by the Scripps family trust, which held a 98.5% stake, until November last year when 94-year-old Robert Scripps, the last direct descendent of the company’s founder, passed away, bringing the trust to an end. It has been seen as ripe for a takeover in the US since then.

It paid £65m (US$102.7m) to acquire Travel Channel International Limited, the UK-based distributor of the Travel Channel brand across EMEA and Asia Pacific, in March last year and has since integrated it with the US version of the channel it already owned.

Discovery meanwhile has been aggressively adding to its channel portfolio around the world over the last 12 months.

It paid €1.325bn (US$1.7bn) to buy 12 SBS Nordic channels belonging to ProSiebenSat.1 Group in December last year and followed that with a €170m (US$222m) deal with France’s TF1 for a 20% stake in sports network Eurosport and several other channels.

In November it was announced that Discovery was negotiating an early buyout of Eurosport – the original deal included an option for Discovery to raise its stake to a controlling 51% in 2014, at which point TF1 can choose to transfer its remaining 49% interest to the US firm.

Discovery said it wouldn’t comment on rumour and speculation. Representatives for Scripps hadn’t returned calls at press time.